Correlation Between Ssangyong Information and Hwangkum Steel

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Can any of the company-specific risk be diversified away by investing in both Ssangyong Information and Hwangkum Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ssangyong Information and Hwangkum Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Information Communication and Hwangkum Steel Technology, you can compare the effects of market volatilities on Ssangyong Information and Hwangkum Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ssangyong Information with a short position of Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Information and Hwangkum Steel.

Diversification Opportunities for Ssangyong Information and Hwangkum Steel

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Ssangyong and Hwangkum is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology and Ssangyong Information is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ssangyong Information Communication are associated (or correlated) with Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Hwangkum Steel go up and down completely randomly.

Pair Corralation between Ssangyong Information and Hwangkum Steel

Assuming the 90 days trading horizon Ssangyong Information Communication is expected to under-perform the Hwangkum Steel. But the stock apears to be less risky and, when comparing its historical volatility, Ssangyong Information Communication is 1.01 times less risky than Hwangkum Steel. The stock trades about -0.04 of its potential returns per unit of risk. The Hwangkum Steel Technology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  698,811  in Hwangkum Steel Technology on October 29, 2024 and sell it today you would lose (204,811) from holding Hwangkum Steel Technology or give up 29.31% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ssangyong Information Communic  vs.  Hwangkum Steel Technology

 Performance 
       Timeline  
Ssangyong Information 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ssangyong Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Hwangkum Steel Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hwangkum Steel Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hwangkum Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ssangyong Information and Hwangkum Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ssangyong Information and Hwangkum Steel

The main advantage of trading using opposite Ssangyong Information and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Information position performs unexpectedly, Hwangkum Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.
The idea behind Ssangyong Information Communication and Hwangkum Steel Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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